Pakistan is a high risk country because of its unstable security situation. However, due to the country’s vast population, there is significant potential for a sizeable market for consumer-orientated businesses as the purchasing power of individuals improves. Pakistan's close geopolitical ties with China should also ensure that it benefits from China's rise, through growing trade and investment.

We keep our clients informed of the latest market moves and political developments in Pakistan, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 16 of Pakistan’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you one step ahead, so you can operate with confidence in Pakistan.

Country Risk

Pakistan Country Risk

BMI View:

Core Views:

  • The Pakistani military is finally making progress in tackling terrorism stemming from the northwestern tribal regions, with the civilian casualty rate falling to eight-year lows. However, the fall in terrorist activity could turn out to be a temporary lull as displaced militants regroup. Meanwhile, little progress has been made in targeting organisations operating in Pakistan that focus their attacks outside of the country.

  • Despite missing the government's target, Pakistan's real GDP growth came in at 4.2% in fiscal year 2014/2015, in line with our forecast, and marking an acceleration from FY2013/14. Improvements in the areas of fiscal reform, energy supply and security should support a slight pick-up in growth over the coming fiscal year, and we forecast real GDP growth to come in at 4.3% in FY2015/16.

  • We...

To read the full article Register for Free or Login

Pakistan Operational Risk Coverage (9)

Pakistan Operational Risk

BMI View:

BMI View: Pakistan is a regional and global underperformer on the BMI Operational Risk Index and investors are faced with a multitude of risks in the country. Transport and utilities infrastructure is ageing and there are frequent interruptions to both supply chains and power supplies. Pakistan is also at risk of a severe water shortage which could impact upon a range of industries. Although one of the most populous countries in the world, investors are presented with a restricted labour pool due to the very poor educational standards in the country and also face high labour taxes. Corruption is another significant risk, affecting all levels of the government and judicial system, and Pakistan is also at high risk of terrorist attacks. These factors result in an overall score of 34.3 out of 100 for Operational Risk, which puts...

To read the full article Register for Free or Login

Pakistan Crime & Security

BMI View:

BMI View: Investors are faced with substantial and severe risks in terms of the crime and security situation in Pakistan. Crime rates, which were already high, have been increasing in recent years and foreigners are frequently the targets of violent assaults and kidnappings. Pakistan is home to a large number of organised criminal groups and is also the base for domestic and international terrorist groups, which exacerbates already tense relations with neighbouring states. The police and military forces are considered highly corrupt, as well as poorly trained and underfunded. In light of these considerations, Pakistan receives a poor score of 8.4 out of 100 for Security Risks, placing the country 37th out of 38 Asia region states, ahead only of Afghanistan.

Pakistan scores particularly poorly for foreign worker vulnerability....

To read the full article Register for Free or Login

Pakistan Labour Market

BMI View:

BMI View: Investors in Pakistan are presented with considerable risks when it comes to the country's labour market. Years of neglect mean that the education system is failing, with low enrolment and attendance rates resulting in a lack of basic skills amongst the majority of the workforce. Despite the large working age population in the country, availability of labour is restricted due to a low level of female participation and poor general health reflected in the low life expectancy in Pakistan. These factors largely offset the potential benefits of a competitive minimum wage and flexible labour market conditions. Overall, therefore, Pakistan has a score of 40.9 out of 100 for Labour Market Risk, which places the country 34th out of 38 states in Asia, ahead only of Tuvalu, the Solomon Islands, Vanuatu and Afghanistan....

To read the full article Register for Free or Login

Pakistan Logistics

BMI View:

BMI View: Businesses operating in Pakistan will face considerable challenges when it comes to logistics. Although the country offers competitive electricity and fuel costs, interruptions to supply are frequent, which is a deterrent for heavy power user; and Pakistan is facing a severe water shortage. The costs of importing and exporting are relatively low; however this benefit is offset by the long lead times caused by the weak internal transport infrastructure in Pakistan. While Pakistan does offer enormous growth potential, at present it does not have the infrastructure to match and as a result the country has a score of 47.6 out of 100 on the BMI Logistics Risk Index. This puts Pakistan in 19th position out of 38...

To read the full article Register for Free or Login

Pakistan Trade & Investment

BMI View:

Trade and investment risks are very high in Pakistan owing to the country's high fiscal and trade barriers and the extent of red tape plaguing its bureaucracy. Compounded by the volatile domestic security situation, foreign investment outflow in recent years has slowed, a trend we expect to continue in the foreseeable future. That said, the country's developed banking system provides good access to international financial markets. For these reasons, the country has an overall score of 29.5 out of 100 for Trade and Investment, putting it in 24th position out of 30 countries in Asia.

Following a sharp rise in foreign direct investment (FDI) in Pakistan from the mid-1990s to the mid-2000s, since 2008 it has slowed significantly, and currently accounts for just 11.8% of Pakistan's total GDP. For the most part, inconsistent economic policies, high fiscal and trade barriers, high corporate tax rates and poor infrastructure are responsible for this...

To read the full article Register for Free or Login

Pakistan Industry Coverage (16)

Agribusiness

Pakistan Agribusiness

BMI View:

BMI View: We take a cautious view of the prospects for the Pakistani agribusiness sector. There are numerous challenges facing producers of all commodities covered by this report, chief among them are a dire security situation, erratic power supply, lack of availability of finance and vulnerability to extreme weather events. The sugar industry is the sub-sector we view as least promising due to its high production costs and poor relations between growers and processors. Nevertheless, the government has taken some positive steps to improve the availability of higher quality seeds for rice, wheat and corn which should raise yields in the medium term. Our expectation for rising prices out to 2019 also gives some grounds for optimism regarding the key export commodities of rice and cotton.

...
Agribusiness Market Value

To read the full article Register for Free or Login

Autos

Pakistan Autos

BMI View:

With Pakistan registering strong vehicle sales growth in FY2014/15, we expect demand momentum to extend into FY2015/16, and forecast sales growth of 17.1%. The positive outlook is underpinned by favourable monetary conditions, which will help to lower credit costs for potential car buyers, while the government's taxi scheme will also continue to spur demand momentum over the coming quarters.

According to the Pakistan Automotive Manufacturers Association (PAMA), for FY2014/15 (July - June), passenger car sales expanded by 28.0% y-o-y, while commercial vehicle (CV) sales grew by 52.1% y-o-y, bringing overall auto sales growth to 31.8% y-o-y. Auto sales for FY2014/15 amounted to 184,633 units.

With record-low interest rates lowering borrowing costs for potential car owners since the rate cuts in January, we believe demand momentum will extend into FY2015/16. For the CV segment, we foresee that a cut in general...

To read the full article Register for Free or Login

Commercial Banking

Pakistan Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

To read the full article Register for Free or Login

Consumer Electronics

Pakistan Consumer Electronics

BMI View:

BMI View: We revised our estimate for the size of Pakistan's consumer electronics market in the Q415 update as we believe the previous figure underestimated the development of the market in recent years. There does, however, remain significant uncertainty about the market due to a lack of available local data and the extent of grey market imports. Looking ahead, our Country Risk team's forecast for strong household income growth informs our outlook for robust consumer electronics spending growth 2015-2019 as households acquire sufficient disposable income to enter the market for the first time. We now forecast total consumer electronics device spending will grow at a CAGR of 7.6% 2015-2019 to reach a total of USD6.2bn in 2019. Despite these positives, we stress that...

To read the full article Register for Free or Login

Defence & Security

Pakistan Defence & Security

BMI View:

BMI View: We expect an escalation in domestic security threats though 2015 in response to the NATO withdrawal from Afghanistan, the ongoing military offensive in the Federally Administered Tribal Area (FATA), and rising tensions with Indian forces along the Jammu Kashmir border. The Pakistan Government has increased military spending, and is investing in indigenous defence companies. They in turn are looking to increase capacity through international partnership, creating opportunities for foreign players. 

The security situation in Pakistan has steadily deteriorated through 2014. Last year witnessed regular terrorist attacks against military and civilian assets, including Karachi International Airport. This illustrates that domestic and international terror cells are well resourced and well trained, making them a credible threat to domestic and international organisations. Moreover, the NATO...

To read the full article Register for Free or Login

Food & Drink

Pakistan Food & Drink

BMI View:

BMI View: The consumer outlook for Pakistan will be supported by a very positive demographic profile. However, an uncertain political outlook casts a dark cloud over the potential for the economy to perform well over the coming years and informs our relatively weak annual real GDP growth forecast of 4.1% over the next decade. Although the consumer story has substantial potential, it could be weighed down significantly by a weak economic outlook. Per capita food consumption is forecast to experience strong growth, however this will be from a low base and consumption is likely to remain significantly lower than other key emerging markets.

Headline Industry Forecasts (local currency):

  • 2015 per capita food consumption growth: +9.9% year-on-year (y-o-y); compound annual...

To read the full article Register for Free or Login

Freight Transport

Pakistan Freight Transport

BMI View:

The freight mix in Pakistan is set to perform moderately in both the short and medium term, with growth constricted somewhat by the parlous state of many integral economies at present. Also, domestic strife, such as the road blockade in Punjab in August 2014, has had a detrimental effect on freight output and such scenarios could flare up again into 2015.

Export cargo worth USD600mn came to a standstill in August 2014 due to a road blockade in the province of Punjab, according to exporters and shipping line sources and reported by Business Recorder. The tussle between the Pakistani government and opposition political parties - Pakistan Tehreek-e-Insaf and Pakistan Awami Tehrik - has resulted in a virtual collapse to businesses, trade, social and exports activities in the province. This could have a significant detrimental impact on the Pakistan freight industry should further blockades take place going forward.

The...

To read the full article Register for Free or Login

Infrastructure

Pakistan Infrastructure

BMI View:

BMI View:  Our outlook for Pakistan's construction sector remains largely subdued for 2015 and beyond. Domestic political uncertainty is undermining confidence in the market, and ongoing security risks continue to deter foreign investors. High levels of government debt and rising inflation are restricting public spending, and while many infrastructure projects are planned or underway, these continue to suffer from escalating costs and delays.

Pakistan's infrastructure network, starting as it does from a low base, does offer enormous long term potential. The country benefits from a strong regional location, good relations with powerhouse China and a large potential labour pool. If it is able to secure political stability and address corruption at high levels in order to create a more attractive investment environment we may see further growth in Pakistan...

To read the full article Register for Free or Login

Insurance

Pakistan Insurance

BMI View:

BMI View: The government-owned and indigenous insurance groups (which combine both non-life and life subsidiaries) are resilient. The Securities and Exchange Commission of Pakistan (SECP) is improving the regulatory environment and is promoting Takaful and micro-insurance - neither of which is likely to contribute meaningfully to the growth of premiums through the forecast period.

At first glance, the metrics of Pakistan's insurance sector make depressing reading. Most people are uninsured. The non-life segment is dominated by basic lines such as motor insurance. Mainly because of price competition, in a fragmented marketplace, non-life penetration (i.e. premiums as a percentage of GDP) will likely fall over the forecast period. Pakistan's overall business environment remains notoriously challenging.

On balance, though, we think that...

To read the full article Register for Free or Login

Medical Devices

Pakistan Medical Devices

BMI View:

BMI Industry View: The Pakistan medical device market is small for a country its size. Domestic production is limited primarily to steel surgical instruments and the majority of the market is supplied by imports. In 2013, BMI estimates that the medical device market was worth USD259.7mn, or USD1.4 per capita. The medical device market is expected to grow at a reasonable rate, with a CAGR of 6.3% forecast for the 2013-2018 period.

Headline Industry Forecasts

...

To read the full article Register for Free or Login

Oil & Gas

Pakistan Oil & Gas

BMI View:

BMI View: While a string of recent exploration successes boosted Pakistan's oil and gas reserves in 2014, we forecast the country's reserves to continue declining over the next decade due to excessive use and lack of new significant discoveries. Nonetheless, recent discoveries and greater private sector involvement in the upstream sector pose an upside risk to our forecast and could stimulate much needed investment thus helping the country temper or reverse the negative trend.

Headline Forecasts (Pakistan 2013-2019)
2013 2014e 2015f ...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Pakistan Pharmaceuticals & Healthcare

BMI View:

BMI View: Healthcare expenditure in Pakistan will grow strongly, albeit from a low base. Central to this trajectory is the rise in household incomes as out-of-pocket health spending remains a dominant source of healthcare financing. This is further supported by the higher health expenditure by administrative unit authorities which have outlined long-term medical strategies. At the sub-national level, the strongest commercial prospects for pharmaceutical and medical device companies will be in the more economically developed provinces of Punjab and Sindh.

Headline Expenditure Projections

  • Pharmaceuticals: PKR231.2bn (USD2.29bn) in 2014 to PRK252bn (USD2.45bn) 2015; +9.2%in local currency terms and +7.1% in US dollar terms.

  • Healthcare: PKR685bn (USD6.8bn) in...

To read the full article Register for Free or Login

Power

Pakistan Power

BMI View:

BMI View: A lack of generation capacity, insufficient investment, as well as fuel and water shortages have narrowed the supply/demand margin considerably, negatively impacting economic activity across Pakistan. Supply shortages will be a dominant theme clouding Pakistan's power sector over 2015. Over the medium-to-long term, the incorporation of non-hydro renewables into the electricity mix, the surge in coal-fired power generation - and consequently the significant decline in oil-fired power generation - will be the key market dynamics.

Key Trends And Developments:

  • In May 2015, the Pakistani announced that it was drawing up plans to liberalise the power sector. The Electricity Act 2015 will allow private sector participation in building,...

To read the full article Register for Free or Login

Real Estate

Pakistan Real Estate

BMI View:

BMI View: Pakistan's commercial real estate sector is underdeveloped, with long-term security problems and unstable politics having served to deter investment into the sector. Although we see this situation continuing, at least in the short term, in the long term there are significant opportunities as prices are low, meaning potential yields are high, and there is considerable room to expand and modernise Pakistan's stock of commercial real estate.

Improved regulations surrounding the creation of real estate investment trusts (REITs) could pave the way for increased investment via this format, and lead to more Pakistani investment being directed into the home market rather than overseas.

We forecast Pakistan's real GDP growth rate will be around 4.1% a year over our forecast period to 2018. The economy is held back by concerns over the security situation and political...

To read the full article Register for Free or Login

Shipping

Pakistan Shipping

BMI View:

BMI View: We expect growth in both major container ports of Pakistan (the ports of Karachi and Qasim), to be driven by favourable market conditions. Pakistan is enjoying steady economic growth due to lower oil prices and the successful implementation of reform programs. The country also shows an increased focus on improving relations and shipping connectivity with trading partners that further boosts trade volumes. Therefore in 2015 and over the medium term through to 2019, the growing economy and improved trading relations will increase throughput capacity volumes at both Pakistani ports.

Good Port Growth Expected

The...

To read the full article Register for Free or Login

Telecommunications

Pakistan Telecommunications

BMI View:

BMI View: Pakistan's mobile market is one of the larger yet relatively underdeveloped mobile markets in the Asia Pacific region. The rollout of 3G/4G services in 2014 has given the market a new impetus Mobile data usage has increased appreciably in the last two years and grew at a faster pace in Q115. This has paved the way for the emergence of a more content-focused industry, although reliance on low-cost prepaid services continues to weigh on the operators and keeps ARPUs low. Meanwhile the wireline market is dominated by the incumbent, creating an imbalance of power. There are few opportunities for an infrastructure-focused new entrant, although there is a case to be made for the establishment of an advanced national broadband network.

Key Data

  • There were 12.072mn 3G/4G mobile...

To read the full article Register for Free or Login

Latest Pakistan Articles

  • Progress in the development of Pakistan's Karachi Nuclear Power Plant highl...

  • China's stock market collapse and currency devaluation have revealed the un...

  • Autonomous vehicles will only be gradually introduced to consumers past 202...

Latest Pakistan Blogs

  • India will seek to expand its geopolitical reach over the coming decade and...

  • China will dramatically increase its military presence overseas over the co...

  • The election of Narendra Modi as India’s new prime minister signals that Ne...

Latest Pakistan Podcasts

  • Several Asian countries are set to see their telecoms industries exper...